USPS Loses $3.1 Billion In Fiscal 3Q 2011
Periodicals revenue decreased 3 percent to $454 million.
The U.S. Postal Service
(USPS) reported increasing losses for the third quarter of 2011—so far the agency has recorded a net loss of $3.1 billion for the period between April 1 and June 30.
The group says that revenue from periodicals decreased some 3 percent from the same period in 2010—total periodical revenue was $454 million on a volume of 1.8 billion pieces.
Overall, total mail volume declined to 39.8 billion pieces for the quarter, compared to 40.9 billion pieces in the third quarter of fiscal year 2010—a decrease of 2.6 percent which the USPS attributes to a drop in first class mail. In just the nine months of the third quarter 2011 net losses rose to $5.7 billion, compared to $5.4 billion during the same period in 2010.
Without changes to the current law, USPS will be unable to make federally mandated retiree benefit payments scheduled to begin in less than 30 days.
“Since the passage of the Postal Accountability and Enhancement Act of 2006 (PAEA), the Postal Service has contributed more than $37 billion to a trust fund for future retiree health benefits,” says Joseph Corbett, CFO and executive vice president of USPS, according to a news release. “We are experiencing a sever cash crisis and are unable to maintain the aggressive prepayment schedule that was mandated in the PAEA. Without changes to the law, the Postal Service will be unable to make the $5.5 billion mandated prepayment due in September.”
USPS predicts that even with a significant cost reduction and revenue growth initiatives, there will be a cash shortfall and will reach its statutory borrowing limit by the end of this fiscal year, based on current financial projects and without legislative change.
“We continue to take aggressive actions to reduce costs and bring the size of our infrastructure into alignment with reduced customer demand,” says postmaster general and CEO Patrick Donahoe, according to a news release.
While overall revenue posted decreases, standard mail revenue did increase by 1.7 percent in the third quarter and package services revenue also increased 3.2 percent. Shipping services—which include express and priority mail—also saw a 7.3 percent revenue increase for the quarter.
Shipping services revenue hit $2.2 billion, which represents an increase of $150 million—volume for shipping services increased by 5.9 percent to 359 million pieces compared to the same period of 2010.
Operating revenue decreased by 1.7 percent to $15.8 billion from $16 billion for the same period in 2010. Mailing services revenue saw a decrease of 3.1 percent or $429 million, down to $13.6 billion in the third quarter 2011—total mailing services volume decreased 2.7 percent to 39.5 billion pieces.
The first class mail drop put that category’s revenue to $7.8 billion for 17.7 billion pieces of mail, standard mail revenue was $4.2 billion for 19.8 billion pieces.
Work hours for USPS were reduced by 9.2 million for fiscal third quarter 2011, which represents a 3.1 percent decrease. The first nine months of 2011 accounted for a 2.8 percent decrease in work hours. USPS is currently identifying 3,700 under utilized post offices for possible closure to reduce losses.